Independence business benefit ‘uncertain’ - Weir Group

Independence could bring benefits, but would also create costs, according to the Weir Group-commissioned report. Picture: TSPL

SCOTTISH independence would create “costs and uncertainties” for businesses which outweigh the benefits, a report for one of the country’s leading firms has warned.

The Weir Group study finds Scotland’s economy could succeed after a Yes vote, but raises major concerns over currency, taxation, trade and pensions.

Its chief executive, Keith Cochrane, revealed he would be voting No as he launched the report yesterday, carried out by think tank Oxford Economics.

Following its publication, Nicola Sturgeon announced she will be meeting bosses at the firm next month to discuss the report, but said similar unfounded claims had been raised by the firm ahead of devolution.

The Deputy First Minister added: “Scotland is a business-friendly country. An independent Scotland will continue to be a business-friendly country.”

It is the latest intervention from the business community in the referendum debate and follows concerns which have been raised by Standard Life and Barrhead Travel in recent weeks.

The Weir Group is one of Scotland’s largest companies employing 600 people in Scotland and 15,000 across the world. It commissioned the study in response to the Scottish Government’s White Paper for independence which outlined a “risk-free” split from the UK.

Scotland’s economy “could succeed” if there was a Yes vote in September’s independence referendum, the study states.

But it warns: “The end of the Union would create a number of costs and uncertainties, and fewer, more uncertain benefits for those businesses so vital to Scotland’s future prosperity, as it goes its own way.”

Mr Cochrane added: “Voters should be aware that what they are being asked to say Yes to carries substantial risks to our economy and therefore to the quality of life of millions of people.”

Meanwhile, if an independent Scotland cannot reach a deal to keep the pound in a currency union – something the main UK parties have already rejected – it says businesses will face additional costs if the country is forced to adopt its own currency.

Changing currency could mean “substantial one-off costs for business, amounting to around £800 million”, according to the report, along with “ongoing transaction costs on Scottish businesses and households of around £500m per year”.

It also warned that “fiscal realities will likely constrain the policy choices of an independent Scotland”, arguing that “an independent Scotland is likely to need to tax Scottish business overall more heavily than if it remained in the UK”.

Scotland could also be faced with £9 billion of tax rises or spending cuts from 2016-17 in order to meet the strict conditions likely to be demanded for a currency union on borrowing levels.

The SNP’s flagship policy to cut corporation tax by 3 per cent below the UK rate would take six to 15 years to pay for itself, said the report.

Mr Cochrane also said Weir “did not have enough information” at the moment to decide if its headquarters would remain in Scotland in the event of a Yes vote and he was not telling people how to vote.

MSPs clashed over the issue at Holyrood where Ms Sturgeon was standing in for Alex Salmond at First Minister’s Questions yesterday.

She said: “We welcome their contribution to the debate and I’m looking forward early next month to meeting staff and senior management at the Weir Group to discuss these very issues and I hope to reassure them.”

The firm, though, was among many who opposed devolution before the 1979 and 1997 referendums on the issue, she said.

The group’s presence in 70 countries around the world, with the bulk of its employees outside Scotland and its recent proposed takeover of Finnish firm Metso shows “no signs of uncertainty” about its operations, finance secretary John Swinney added.

But the No campaign was quick to seize on the intervention last night.

Chief Secretary to the Treasury, Danny Alexander, said Weir was the latest in a “long list of businesses and academics” that have said independence will cost Scottish people money and jobs.

Former chancellor Alistair Darling, leader of the pro-UK Better Together campaign, said the report showed Scotland’s place in the UK was “good for jobs here and it keeps down costs for families in Scotland”.